The transition from LIBOR to SOFR has been slow. We present some key reasons for the delay in SOFR’s broader integration into markets. Important bottlenecks include lags in the evolution of SOFR-based swaps and derivatives markets and in the development of a term SOFR structure.

With the clock ticking on LIBOR, the market begins the adjustment to SOFR

The Treasury market received a reprieve in September when the White House and Congress agreed on legislation coupling hurricane relief funding with a suspension of the debt ceiling until Dec. 8. The agreement puts off a potentially contentious political debate and keeps the government funded until at least year-end.

Once again, the US debt ceiling is in focus. Since March, the US Treasury has been employing “extraordinary measures” to fund the US government, such as halting contributions to certain government pension funds and borrowing money set aside to manage exchange rate fluctuations. But those measures are expected to run out this fall.

In the first quarter of 2017, a newly minted Congress will be tasked with approving an increase in the US government’s debt limit — the so-called “debt ceiling” — which is set to expire on March 15, 2017. If the debt ceiling is not raised, the Treasury bill market could experience volatility as investors adjust to a potential reduction in the supply of Treasury bills.